Illuminati Round Table Call Notes: How to Solve Problems and Overcome Barriers in DeFi
Pendulum, the importance of Polkadot & on-chain FX @PendulumAlex
DeFi Is That Problematic Ex.
You Just Can't Quite Figure It Out.
@PendulumAlex Joined Our Illuminati Roundtable For A Therapy Session To Solve Problems & Overcome DeFi Barriers 👇
You can listen to the full audio here:
Alex got into crypto in 2013 while living in Berlin.
There were many ‘nerd-centric’ BTC meetups, and he attended these to learn about Bitcoin.
Alex read the BTC whitepaper and could see how crypto could disrupt the financial system.
He bought 20 euros worth of BTC to pay for a drink at a bar that accepted BTC as a payment method. The success of that transaction got him hooked on the BTC movement.
In 2016, Alex joined Satoshi Pay to build it and make it his professional focus and career.
Since then, he has developed many apps on the Bitcoin network and the Stellar blockchain.
Alex developed a micropayment system for publishers and focused on cross-border payments.
His goal has always been to allow businesses to transfer money quickly on-chain, including currency exchange, and he wants to bring businesses to the blockchain space.
About Pendulum and the importance of Polkadot
His solution to his goal was to build a blockchain called ‘Pendulum,’ which had a successful pre-sale at the end of 2021.
Pendulum is a blockchain built on top of Polkadot.
They chose Polkadot because of the interoperability that comes with the chain.
Another reason is that they wanted to target businesses and Fintech, so they required trust.
Having Polkadot’s relayed chain, you get shared security which is ‘enterprise grade’ and looked upon in the industry.
Alex says that the possibility to transfer data and assets between different parachains in a trust-less manner is a huge reason why Alex is bullish on Polkadot.
He emphasizes how projects can operate quicker and cooperate with more projects trust-less across various blockchains, which would be more difficult in other ecosystems.
On-chain FX and what Pendulum is doing about this?
Alex emphasizes it was always Pendulum’s vision that they understood FX doesn’t work for many businesses internationally.
Alex is aware of the problems banks have with traditional foreign exchange, such as costs, time, transparency, and settlement risk (meaning they never know where their money is).
Alex explains how cross-border payments currently work; “A bank from Mexico wants to send money to Brazil and requires SWIFT access from the bank (which is already difficult to acquire). After sending the money, it goes through various other banks in-between, dealing with multiple currencies, each bank taking fees.
The exchange rates are agreed upon beforehand, but it’s not quite transparent how these rates are created, and it is also hard to audit from a business and corporation’s perspective. The transaction has much more to do with trust with big banks in dealing with your capital.”
Alex says if you put this market on-chain, everyone can approve the liquidity, transactions, volumes, and FX rates to be secure from manipulation. He emphasizes how Pendulum can aid and automate this process.
Alex says there is also a settlement risk when sending money in the traditional space. He talks about how using a smart contract means that the risk is completely mitigated as everyone mutually agrees and the process is automated.
Alex also talks about reducing fees and quicker speed and how Pendulum wants to bring this to life.
The process of launching a chain?
Alex says with the Polkadot launch, Pendulum needed to win a parachain auction in December 2022 and review many documents, and this reserved a spot on the Polkadot ecosystem as a parachain.
Alex is producing a blog post with everything Pendulum couldn't find in these docs and recommends any other parachains review that before going live.
Next big project Pendulum is building?
Alex says as well as ramping up the initial infrastructure, they want to remove pseudo, meaning they decentralize the blockchain faster.
The protocol launch is coming up with Zeroxamber and Spacewalk, which is the Stellar bridge that Pendulum is building.
After this, Alex says they want to focus on business use cases and stablecoin price feeds, such as integrating oracles with anything connected to fiat.
Pendulum will also build an improved UX user interface so that non-crypto savvy people can use Pendulum as a cross-border payment system, utilizing the DEX to exchange currencies.
They wish to use the power of smart contracts to make the transaction frictionless.
Pendulum wishes to provide the best price feeds for stablecoins.
What’s Pendulum’s target market?
The main audience Pendulum focuses on will be businesses and SMEs worldwide and not financial institutions as much.
Alex says banks wish to transition across more slowly once there is an established alternative currency market.
Pendulum will solve the problem for businesses transferring money across as they still are paying upwards of 4-5%, and they can lower that by at least ten basis points with their AMM.
Alex says he sees the most significant growth here before they then focus on features that financial institutions can then use in the 2nd and 3rd years of Pendulum's progression.
Where do you see the future of DeFi going over the following years?
Alex says he believes DeFi will move more mainstream over the following years.
He says that more prominent companies will transition as these significant advantages come to the limelight.
Alex refers to stablecoin growth and wallet users rising. He says that this indicator grew regardless of geopolitical issues and macro-outlook; this is a positive pointer for where DeFi is heading and the adoption of the space.
Alex reiterates that these stablecoins and DeFi development will be a more mainstream focus than NFTs and co, which are more "crypto-related."
What impact do you see regulation having?
Alex says he sees progress in protecting users when regulation takes place.
He also believes regulators may take a step back in certain areas to not hinder the organic growth of the industry. They will have to follow the trajectory instead of limiting growth (like the SEC and BUSD case).
Alex talks about their role will be to aid the non-crypto savvy user as well as companies.
Once these issues are fixed, he believes adoption will be pushed from these pillars.